Italy focus: Where is the Italian in-house legal market as we begin 2016?

14/01/2016

In Italy the in-house legal market is not as developed and fast moving as in the UK, Asia or some other countries in Europe such as France and Germany. However, this is changing. It is becoming more structured and more important across Italy and in this article our consultant Tina Lombardi outlines the current state of play for in-house counsel and why the market is shifting.

2015 brought the first signs of improvement to the Italian economy, with a 0.9% increase in GDP in the last four months of 2015 compared to the previous year and a predicted 1.4% rise for both 2016 and 2017 (OECD). The country is experiencing an increase in the amount of interest from foreign investors, and for the first time in years they are considering Italy as a potential place to do business.

The innovations made by the Renzi government have included some changes to employment law, making the job market more flexible and this has led to an increase in the number of new opportunities coming to the market. And although Italy is still experiencing higher unemployment than other countries in Europe, the signs of recovery are there. Therefore, we saw growth across the in-house legal market throughout 2015, with more job openings compared to previous years.

As in the UK, the regulatory and compliance landscape in Italy is becoming more and more complex. Regulations in areas like anti-corruption, governance, transparency, privacy, and in Italy, even the outsourcing of specific areas of business, present increased risks for businesses, especially those with an international focus. Considering these changes, the role of the in-house lawyer has become increasingly important and more and more they are perceived as a crucial business partner. These lawyers must be able to advise businesses on how to reach commercial goals while keeping risk to a minimum. In addition, as corporations continue to try to reduce their spending in reaction to the difficult years of the recent past, they are looking for a General Counsel who is also able to manage and maximise budgets and legal spend.

As a result it has become common for businesses in Italy to hire more senior and expert lawyers (often from private practice) who can understand the challenges of business. These lawyers are capable and confident at actually doing the legal work independently and only look to outsource work to external counsel when the matter is particularly sensitive or requires niche skills and experience.

Although the in-house legal route has not yet been officially recognised by the Italian Bar as a career path, the in-house counsel in Italy has seen its status and recognition grow considerably in recent years within the business and legal community. The In-house Counsel Association (AIGI) has been constantly promoting the in-house profession, creating a sense of unity and working with institutions to obtain official status.

Today, multinational corporations recognise the necessity of having a structured legal department that is involved in all the business’s strategic decisions. Their general counsel are pushing for the creation of real “in-house” law firms, preferably with a separate compliance department, believing that this will be more commonplace for major companies in the near future. They are able to argue the cost-benefit also, as in the long term a dedicated in-house legal function is likely to reduce the number of regulatory fines, law suits, and white-collar related proceedings.

In-house and small businesses

Small and medium sized businesses are a crucial part of the Italian economy. They represent the majority, and often the best, of the country’s manufacturing industry: with a total of 4.4 million enterprises. 99.9% of the manufacturing industry is made up of small businesses and they employ 81% of the Italian working population. They are also responsible for 54% of total exports.

Many of these businesses cannot afford to hire a permanent in-house counsel. Often they carry on their day to day activities without any specific advice, resorting to hire external lawyers only when a matter reaches litigation. With this risk increasing as a result of the complex regulations, small and medium businesses are beginning to realise that it is more important than ever to consider hiring their own in-house counsel.

With such positivity returning at the end of 2015, we predict that 2016 will be a busy year for the in-house legal search and recruitment market in Italy. More and more businesses, of all sizes, will come to recognise the importance of the in-house counsel and this will help to cement the idea for lawyers that a move in-house can present a real career opportunity.